Hypertext organization ikujiro nonaka interview


Published on

Nonakas Hyperte

Published in: Education, Business
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Hypertext organization ikujiro nonaka interview

  1. 1. FEATURE Conversation with Ikujiro Nonaka C. Otto Scharmer C. Otto Scharmer (COS): Why did you become interested in knowledge creation? Ikujiro Nonaka: Originally, I was interested in information processing. At the University of California, Berkeley, my major was marketing. I studied consumer decision processes under Francisco Nicosia. His major contribution was the conceptualization of consumer decision processes from the perspective of information processing. My interest shifted from marketing to organization theory after I took a sequence of three sociology courses from Neil Smelser’s theoretical viewpoint and Arthur Stinchcomb’s methodological view- point—a beautiful marriage of theory and method. We had to construct our own social theory, so I proposed a theory on centralization versus decentralization. The turning point in my transition from information to knowledge came when I par- Ikujiro Nonaka ticipated with my colleagues Hirotaka Takeuchi and Kenichi Imai in a Harvard Business Professor School colloquium on productivity and technology in March 1984. I found that the ex- Hitotsubashi University Xerox Distinguished Professor isting theory of information processing was not adequate. The process of innovation is of Knowledge not simply information processing; it’s a process to capture, create, leverage, and retain University of California, Berkeley knowledge. I was beginning to theorize how an organization creates knowledge. COS: What brought you to the insight that information processing is insufficient? Was it your exposure to companies, to particular pieces of literature, or was it your thinking? Ikujiro Nonaka: When we talked with individuals in innovative organizations, they al- ways started with their beliefs. A belief about images of the world, which you may call a mental model, is subjective. They tried to convert this subjective belief into objective lan- guage. They also tried to justify it within their organizations and finally realize it in a con-24 crete form. The whole process originated in their subjective beliefs. But as you know, Herbert Simon’s information processing paradigm tries to separate facts and values. Value problems are always avoided in “science,” which has to be based on facts. So in his theory, Simon intentionally excludes value problems. He treats value as a given because it is subjective. Information processing excludes our beliefs and im- ages of reality. But an innovation comes from a subjective belief or an image of the world. I tried to differentiate two types of information, namely, syntactic and semantic in- C. Otto Scharmer Lecturer, MIT Sloan School of formation, and wrote The Corporate Evolution: Managing Organizational Information Management Creation. I shifted from information processing to information creation. With this in University of Innsbruck, Austria mind, I continued research on the innovation process and discovered that information Research Partner, Generon creation is not enough. Finally, I came up with the idea of knowledge creation. Consulting COS: What is the difference between information creation and knowledge creation? © 2000 by C. Otto Scharmer. Ikujiro Nonaka: In simple terms, information is the flow, and knowledge is the stock. McKinsey & Co. sponsored the Information is the flow of a message, while knowledge is created by accumulating infor- interview, which was conducted mation. Thus, information is a necessary medium or material for eliciting and construct- in February 1996. ing knowledge. Volume 2, Number 2, REFLECTIONS
  2. 2. SCHARMER Another difference is that information is something passive. When I switch on a TV,information comes, regardless of my commitment. But knowledge comes from my be-lief, so it’s more proactive. I emphasize the nature of knowledge as “justified belief and skill.” I consider knowl-edge to be a dynamic human process of justifying personal belief toward the truth. More Conversation with Ikujiro Nonakabroadly, knowledge has to do with goodness, beauty, and truth. I found this aspect of knowl-edge while studying the innovation process. When you look into the innovation process, itreally has to do with developing a justified true belief. The innovation process is not simplyinformation creation, but starts from our beliefs and aspirations and is finally crystallizedwithin and between organizations through collaboration. In the West, there is a long history of philosophicalinquiry into knowledge or epistemology, from Plato to . . . knowledge has to do withDescartes to Michael Polanyi. Drawing especially onPolanyi, I conceptualized knowledge in terms of two goodness, beauty, and truth.types, tacit knowledge and explicit knowledge. Tacitknowledge is personal, context-specific, and thereforehard to formalize and communicate. Explicit knowledge, on the other hand, is transmit-table in formal, systematic language. Tacit knowledge and explicit knowledge are not totally separate but are mutuallycomplementary entities. Without experience, we cannot truly understand. But unless wetry to convert tacit knowledge to explicit knowledge, we cannot reflect upon and shareit organizationally. Through this dynamic interaction between the two types of knowl-edge, personal knowledge becomes organizational knowledge. And the knowledge or in-tellectual infrastructure of an organization encourages its individual members to developnew knowledge through new experiences. This dynamic process is the key to organizational knowledge creation. The interactionbetween the two types of knowledge brings about what I call four modes of knowledge con-version, that is, socialization, externalization, combination, and internalization (figure 1). Socialization is a process of creating common tacit knowledge through shared expe-riences. For socialization, we need to build a field of interaction, where individuals shareexperiences and space at the same time, thereby creating common unarticulated beliefsor embodied skills. Externalization is a process of articulating tacit knowledge into such explicit knowl-edge as concepts and/or diagrams, often using metaphors, analogies, and/or sketches.This mode is triggered by a dialogue intended to create concepts from tacit knowledge.Creating a new product concept is a good example. Combination is a process of assembling new and existing explicit knowledge into asystemic knowledge, such as a set of specifications for a new product prototype. Often,a newly created concept should be combined with existing knowledge to make it mate-rialize it into something tangible. 25 Internalization is a process of embodying explicit knowledge into tacit, operationalknowledge such as know-how. “Learning by doing or using” triggers this mode. Explicit Figure 1 Four modes of knowledgeknowledge documented into text, sound, or video formats facilitates the internalization creation.process. Therefore, manuals, a quintessential example ofexplicit knowledge, are widely used for internalization.COS: On the one hand, you are criticizing approaches tolearning that are overly centered in the mind, that lack“learning by doing.” On the other hand, you relate learn-ing concepts to internalization, which primarily is learn-ing by doing. How do those two go together?Ikujiro Nonaka: I would like to talk about the differ-ences between organizational learning and knowledgecreation later. But in the theory of organizationalknowledge creation, we have to go through all fourmodes dynamically. It seems to me that organizationalREFLECTIONS, Volume 2, Number 2
  3. 3. SCHARMER learning theories do not comprehend this whole dynamic process. I limit learning to in- ternalization alone, namely, conversion from explicit knowledge to tacit knowledge. Learning theories cannot explain the innovation process or the total process of organiza- tional knowledge creation.Conversation with Ikujiro Nonaka COS: From what I know about the work of the Society for Organizational Learning (SoL), I would say that Peter Senge’s concept of generative learning is essentially about the pro- cess of creating. It starts with what people want to create and focuses on the creative ten- sion between aspiration, on the one hand, and current reality, on the other. So his whole notion of personal mastery is based on the methodology of the creative arts. I would like to focus on your work and on the architecture of your theory first, and then discuss how that relates to learning theories and SoL. I think SoL’s work is in tune with your theory. In middle-up-down management, there is a differentiation between roles, and people have only one role. There is a functional differentiation, where different people play dif- ferent roles and come together in a team for knowledge creation. In the hypertext organi- zation, there is another type of differentiation, and the people participate in all three roles. As I see it, the hypertext organization is much more related to twenty-first century thought than middle-up-down management, which is more traditional, in my view, be- cause you are saying there are three roles and different people play different roles. So my questions are: How does middle-up-down management relate to the hypertext orga- nization? How do the three levels integrate? What is the integration between the three structural levels and between the three roles? Ikujiro Nonaka: First of all, I emphasize the positive roles of middle managers. In the US, middle managers are denigrated as cancer. The Japanese see middle managers as key to facilitating the process of organizational knowledge creation. They serve as the strategic knot that binds top management with front-line managers. They are a bridge between the visionary ideals of the top and the often chaotic realities of business confronted by front- line workers. They are the true “knowledge engineers” of the knowledge-creating company. In the middle-up-down model, top management creates a vision or a dream, while middle management develops more concrete concepts that front-line employees can understand and implement. Middle managers try to solve contradictions between what top management hopes to create and what actually exists. In other words, top management’s role is to create a grand theory, while middle management tries to create a mid-range theory that it can test empirically within the company with the help of front- line employees. The middle-up-down model is not an either-or approach; it is an inter- active process of both top-down and bottom-up. COS: Middle managers have to integrate the whole system, right?26 Ikujiro Nonaka: Yes. So to promote integration structurally, the hypertext organization comes in. It is the dynamic synthesis of the bureaucratic structure and the task-force structure, and it reaps benefits from both. The bureaucratic structure efficiently imple- ments, exploits, and accumulates new knowledge through combination and internaliza- tion, while the task force is indispensable for creating new knowledge through socialization and externalization. The efficiency and stability of the bureaucratic struc- ture are combined with the effectiveness and dynamism of the task force in a hypertext organization. Moreover, another layer, the knowledge base, serves as a clearinghouse for the new knowledge generated in the bureaucratic structure and the task force. COS: I think I understand this. But what is much less clear to me is the knowledge-base layer. Sometimes you call it the corporate university and sometimes the knowledge base. Ikujiro Nonaka: The knowledge-base layer includes such intellectual capital as corporate vision, organizational culture, databases, and individual knowledge. Once the cross-func- tional team completes its task, team members move down to the knowledge-base layer and make an inventory of newly created knowledge. Then team members return to the business layer for routine operations until called to another project. Volume 2, Number 2, REFLECTIONS
  4. 4. SCHARMER Conversation with Ikujiro Nonaka Figure 2 The hypertext organization. Source: Ikujiro Nonaka and Hirotaka Takeuchi, The Knowledge- Creating Company, Oxford University Press, 1995, p. 169; reprinted with permission of the publisher.COS: So it would not include, for instance, space for reflection? You suggested institution-alizing reflection in action. Would that be a part of the corporate university?Ikujiro Nonaka: Before going into that, let me add what I call “enabling conditions” fororganizational knowledge creation. There are five enabling conditions in my theory—in-tention; autonomy; fluctuation or creative chaos; redundancy; and, finally, requisite vari-ety. Intention is embodied in an organizational vision. Autonomy increases the chance ofserendipity. Fluctuation and creative chaos stimulate interaction between organizations.The benefits of creative chaos are possible only if members can reflect on their actions;otherwise, chaos leads to destruction. Redundancy includes intentional overlapping ofinformation about business activities, management responsibilities, and the company.Requisite variety means a minimum internal variety for the purpose of organizational in-tegration and a maximum internal variety for an effective adaptation to the environment.Organizational information and knowledge must match the external complexity.COS: Different levels of knowledge may require different infrastructures and methods? 27Ikujiro Nonaka: A hypertext organization is a structural device that incorporates theseenabling conditions. What is unique about a hypertext organization is that three totallydifferent layers or contexts coexist within the same organization (figure 2).COS: I am wondering if you would agree to my putting this in different terms. The firstrow is about knowledge creation. The second row is about knowledge application. Andthe third row is about knowledge dissemination.Ikujiro Nonaka: Yes, so the three layers are interactive.COS: In that sense, wouldn’t the corporate university, because it’s dealing with dissemi-nation, include all the infrastructures dealing with capacity building and creating newcapabilities? I would have drawn that the other way around. Knowledge creation, knowl-edge application, and, in between, knowledge dissemination. Because the basic dialecticis between these two, and the other is in between. That, in a way, is a major innovationconceptually, because the task force level has been thought about before.Ikujiro Nonaka: You may be right. That’s an interesting idea and good suggestion.REFLECTIONS, Volume 2, Number 2
  5. 5. SCHARMER COS: Concerning your five stages or model of organizational knowledge creation, from the view of Western companies, the most crucial ones are steps one and five (figure 3). In your writings and based on your experience, you are focusing mostly on externalization, which is also very important. But I think steps one and five are even more important.Conversation with Ikujiro Nonaka Ikujiro Nonaka: Socialization, right? COS: Yes, because you have the infrastructure in place in Japanese companies, whereas the infrastructure is missing in US and European companies. In the US, there are differ- ent conditions. How could you create such an infrastructure to give a point of departure for the whole process? Ikujiro Nonaka: First, I’ll answer your question about organizational structure. I wrote a Japanese-language book on the US Marine Corps. The Marine Corps has a unique orga- nizational system called the Marine Air-Ground Task Force (MAGTF). The idea is to keep the air, land, and logistical elements together as an integrated team. COS: . . . fractal structure, right? Ikujiro Nonaka: Yes. It moved very quickly from a group to an organization without los- ing the basic functions of an organization. Without a fractal configuration, the organiza- tion has to dissolve. Most cross-functional teams in Japanese companies consist of 10 to 30 members with diverse backgrounds, and there are 4 to 5 core members, each with multiple functional backgrounds. Is socialization crucial? Yes, but companies like 3M or Hewlett-Packard are very team-oriented and individual-oriented. Organizationally, Japanese companies en- force the formation of cross-functional teams, but in 3M’s case, it’s more voluntary, spon- taneous, or autonomous. But the difference is a matter of degree, not kind. I have to admit that socialization is difficult to achieve in the US because of its indi- vidualism and incentive systems. The Japanese incentive system is more team-oriented, and, in principle, we don’t lay off people. Consequently, it is relatively easy to share ex- periences at Japanese companies. I admit there are infrastructural differences, but none- theless, socialization is possible in the US. With socialization, American teams are stronger than Japanese ones, because Americans are strong individuals. Strong individu- als and a strong team are complementary. Japanese teams may not necessarily be so. To institutionalize team-oriented spirit, however, US organizations may need strong corporate cultures, such as those at 3M, HP, or the Marine Corps. For the Japanese, it’s relatively easy to do that without strong organizational cultures.28 Figure 3 Five-phase model of the organizational knowledge-creation process. Source: Ikujiro Nonaka and Hirotaka Takeuchi, The Knowledge- Creating Company, Oxford University Press, 1995, p. 84; reprinted with permission of the publisher. Volume 2, Number 2, REFLECTIONS
  6. 6. SCHARMERCOS: In the process model, is cross-leveling really a fifth phase, or is it a higher level ofthe previous four? SoL has had success in some projects, but in organizationwide dissemi-nation of learnings and results, the whole corporate system reacts. The disseminationprocess does not work right. Conversation with Ikujiro NonakaIkujiro Nonaka: Again, fractal or holographic structures help.COS: What exactly does fractal mean in terms of different functions or different hierar-chical levels?Ikujiro Nonaka: Both are related. Autonomous individuals function as part of the fractalor holographic structure, in which the whole and each part share the same informationand knowledge. Original ideas emanate from autonomous individuals, diffuse within theteam, and then become organizational ideas. In this respect, the self-organizing indi-vidual assumes a position that is analogous to the core of nested Russian dolls. From theviewpoint of knowledge creation, an organization is more likely to maintain greater flex-ibility in moving from an individual to a group, to a department, a division, and corpora-tion, and again back to the individual. What we call the hypertext organization is made up of interconnected layers or con-texts: the business system, the project team, and theknowledge base. In the case of Sharp, the Urgent ProjectSystem gives its members, who could be recruited fromany section or department, the same “gold badge” au- . . . the self-organizing individualthority as corporate directors during the project period. assumes a position that is analogousOnce the team develops a concept and a prototype, theyare quickly transferred to the relevant divisions for crys- to the core of nested Russian dolls.tallization. In the hypertext organization, you have tohave strong support from top management to form this type of team.COS: You sometimes define a hypertext organization as the ideal situation in which itsmembers can switch to the context they need. But in your examples, it’s not that flex-ible. If I’m appointed by the president to a top-priority team, that doesn’t mean that I canswitch the context whenever I choose. I haven’t seen this instant switch in your ex-amples. I have seen it only in your definition.Ikujiro Nonaka: Of course, changing the context within the company is constrained bymanagement. But the friction among individuals and groups in setting their task bound-aries is greater and more dynamic in the hypertext organization. Once top managementapproves the members of the Urgent Project Team, they are empowered to do whatever 29they like to complete the project within a limited time. Also, they closely interact withtop management. The roles and functions of top, middle, and lower-level managers mayrotate depending on the context within this compressed process. For example, a projectleader may take the role of a top manager, and a CEO can be below him or her, depend-ing on the phase of the project. Why knowledge creation? The most fundamental idea is that we can synthesize vari-ous theories and methods from the perspective of knowledge or knowledge creation. Inneoclassical economics, the market is conceptualized as the place for competition,mainly in terms of price. What has not been explored so far is that the market can beviewed as a reservoir of knowledge. As Friedrich Hayek pointed out, the most criticalknowledge in the market is contextual, namely, tacit knowledge. How to build a system to convert tacit knowledge in the market to explicit knowl-edge and finally crystallize it into a product is an organization’s fundamental function.Organization design can be conceptualized totally from the perspective of knowledgecreation. We can also reconceptualize business strategy from the knowledge-creation perspec-tive, that is, how to capture, create, leverage, disseminate, and retain intellectual capital orknowledge. Leadership processes are also conceptualized from the perspective of initiating,REFLECTIONS, Volume 2, Number 2
  7. 7. SCHARMER promoting, and maintaining the four modes of knowledge creation. Knowledge engineering is the key process of lead- ership behavior. Corporate culture is further conceived from the perspective of shared experiences of acquiring, creating, exploiting, and retaining knowledge. Furthermore, it may beConversation with Ikujiro Nonaka possible to construct basic disciplines of knowledge cre- ation, such as the economics, sociology, or psychology of knowledge creation. COS: Your criticism of Western theoreticians such as Peter Senge is that they lack theory. So you’re using an argu- ment that Western folks usually use against, for instance, Japanese approaches. Ikujiro Nonaka: The learning model is rooted in the Skin- © Gene Beyt nerian behavioral paradigm, but our theory is rooted in epistemology. COS: I agree that learning concepts are about combination and internalization. But the work at SoL includes the externalization piece. For instance, dialogue plays a critical role in SoL’s work. Dialogue, based on the work of David Bohm, is understood as collective inquiry into underlying assumptions and shared mental models. For Bill Isaacs, the di- rector of the Dialogue Project, developing a theory of dialogue is essential. This is a field theory, so it describes the factors that determine the quality of the field. This is, especially for US and European companies, crucial because that’s where the problem is in many cases. For instance, there was a highly successful project at Ford, but the larger system re- sisted, so the dissemination process was not successful. Research has found that one leverage to improve quality and team learning is to improve the level of trust among team members. In SoL’s work, I see all four angles that you describe in your work. How- ever, your criticism may also shed some new light on what SoL is doing. Ikujiro Nonaka: Since the introduction of our theory, I have seen a number of papers from the learning school incorporating the four modes of knowledge creation with differ- ent labels. I have two criticisms of learning perspectives: First, they have not developed any comprehensive theory. They lack a view on the fundamentals of epistemology: what is knowledge, what is the nature of knowledge, and what constitutes learning. They are not clear about how the knowledge is captured, cre- ated, leveraged, and disseminated. They tend to focus on methods and tools of internal-30 ization. They are focused on the relationship between individuals and groups, but are not clear about the relationships between individuals, groups, organizations, and interorganizations. Second, they generally consider learning to be an adaptive process. They are trapped in the behavioralistic concept of stimulus-response. They lack an active stance toward the environment. They view “double loop learning” as a special task. COS: I agree with your criticism of the learning school, but I think that you are referring to only one part of the learning field. I see four paradigms of learning. One reason I was so in- trigued by your work is because of your basic dimensions with ontological and epistemologi- cal distinctions. I also used those distinctions in my dissertation thesis, but in a different way. In my thesis, the epistemological axis is the distinction between idea and experience. The ontological axis is the distinction between materialism and spiritualism, which could be called simple modernity and reflective modernity. Then you have four paradigms: the rationalistic view, the adaptive concept of learning, the emergent concept of learning, and the generative concept of learning. Senge’s approach would be the latter in my view. And the Skinnerian approach is the adaptive approach. It is experienced-based or actual be- havior, but only in the mode of simple modernity. So it is only the materialistic, external view, not the spiritualistic, internal view. Volume 2, Number 2, REFLECTIONS
  8. 8. SCHARMER Your criticism of Senge is that the emergent type of learning is less emphasized and the main emphasis is on the generative concept of learning. But that concept also in- cludes knowledge creation. You imply that Senge does not take into account the embodi- ment and unity of mind and body. Some of the new writings shed light on practical experiences. In The Fifth Discipline Field Book, Senge and others show that there is a lot Conversation with Ikujiro Nonaka of collective inquiry, to use your terminology, in the externalization mode. Ikujiro Nonaka: In our framework, learning is internalization. COS: Would you agree that there is a need for deeper theoretical reflection? The main focus of SoL’s work is not to create consistent theory, but to create a new . . . Ikujiro Nonaka: . . . practice. COS: Yes. To cooperate with real companies. To create a group of companies that has practical experiences in projects. In other words, to generate data that could generate a new theory. Ikujiro Nonaka: American pragmatism is fine. Everything is packaged. That’s something that is a fundamental difference between pragmatism and epistemology. We have to go back to Plato and Descartes. COS: I agree. But the American contribution may come from a philosophical tradition that is primarily based on pragmatism and an action orientation. Ikujiro Nonaka: Yes. COS: There may be other contributions from Japan and Europe that could develop the epistemological foundation on a global scale. Ikujiro Nonaka: You may be right, and I understand that Dr. Senge has a more profound philosophy behind the developed techniques. COS: There are also many other approaches toward organizational development and learn- ing. Russ Ackoff makes the following distinction: First, there is data, then information, then knowledge. So information is about know what, and knowledge is about know how. The next level in his terminology is understanding, or know why. To transfer knowledge, you use training; to disseminate understanding, you use education. Would you agree with Ackoff’s distinction between knowledge and understanding? 31 Ikujiro Nonaka: Understanding is built in knowledge. In our dynamic theory of organiza- tional knowledge creation, know how is acquired mainly in socialization, know why is in externalization and combination, and understanding is achieved after internalization. Through one cycle of the knowledge spiral, we truly understand. We view knowledge as a dynamic human process of justifying personal belief toward the truth. The complete cycle across four modes is a transcendental process in which individual knowledge becomes group, organizational, and interorganizational knowledge, and then back to the individual.REFLECTIONS, Volume 2, Number 2